Romanian Scholar Oehler-Sincai on China-CEEC Relations

(Dr. Iulia Monica Oehler-Sincai is senior researcher of the Institute for World Economy, Romanian Academy.)

Q:In your view, how are China’s initiative of 16+1 cooperation between the Central and Eastern European countries (CEECs) and China perceived in Romania or any other CEECs? What do they think of it?

A:China is or should be considered as a “natural partner” for the CEECs not only from a historical perspective, but also taking into account its role on the global stage, its openness and actual diplomacy channels such as the high-speed rail diplomacy, financial diplomacy and the larger framework of the Silk Road Diplomacy.

Perceptions in general (and regarding China and the 16+1 in particular) are influenced through many channels, including political, geostrategic, economic, cultural and communicational. People to people exchanges, including tourist flows, might be as important as the political and economic relations. Moreover, the 16+1 relationship can be understood only if we take into account the strong connections with other relevant actors present in the region.

How is China perceived is difficult to assess, at least in Romania. We present below several arguments in this regard.

(1) The mass media in Romania do not bring too often to the forefront the strengths of the Chinese economy and the potential of the Sino-Romanian economic cooperation;

(2) There is no detailed study regarding this perception (maybe it should become a task of the six Confucius institutes present in Romania);

(3) Different political parties have different opinions on the bilateral cooperation;

(4) Issues such as freedom of the press in China, human rights, South China Sea, debate over the China market economy status, negative effects of the Chinese economic slowdown and internal economic weaknesses are among major topics of the news. If such topics become dominant, this might generate incorrect perceptions, affecting the bilateral relationship on the long term.

(5) And the list could continue.

In contrast to the above mentioned evidences, there are encouraging press statements issued by institutions such as the Romanian Chamber of Commerce and Industry, Romania-China Bilateral Chamber of Commerce, different ministries and also by ambassadors. There is also good news from the cultural side of the bilateral cooperation. Such positive signals should be more often transmitted so that all the facets of complex China could be understood.

The global financial and economic crisis of 2008-2010 highlighted that a strong dependence on the EU markets and capital was one of their weaknesses. Therefore CEECs started to Look East. Russia was not on the list of options, due to the “uneasy relationship” with CEECs. In contrast to Russia, the common past with China had offered many success stories with respect to fruitful cooperation. Romania represented a good example in that regard.

Q:How about the relations between China and Romania?

A:The Romanian authorities were not constant in signalling China that consolidation of bilateral relations represented a priority. The Romanian Prime-minister Victor Ponta (May 2012-November 2015), a Social Democrat, declared that he wished Romania to be “the best friend of China among the EU countries” and persistently supported the Chinese investments in Romania. On the contrary, the President of Romania at that time and other influent voices recommended the Romanian premier to look at the Chinese investments “with caution”.

Prime Minister Li Keqiang’s visit to Romania in November 2013 was his first trip to CEECs and also the first visit of a Chinese Premier to Romania in 19 years. The Governments of Romania and the People's Republic of China signed a Joint Declaration on deepened bilateral cooperation “under the new circumstances”. According to the Declaration, the relations between the two countries "are an example of inter-state relations in the current period", they rely on the mutual respect of sovereignty and territorial integrity and on considering the key interests and the major concerns of each party.

Year 2014 marked for China and Romania 65 years of diplomatic relations and the tenth anniversary of the comprehensive partnership. In July 2014, the first Romanian Cultural Institute in Asia was inaugurated in Beijing, after six Confucius Institutes were inaugurated in Romania between 2007 and 2013.

However, in spite of the favourable momentum created during 2012-2015, there have been more plans and Memorandums of Understanding than implemented projects. Among the large scale announced projects (the so-called “second wave” of Chinese investments, mainly in infrastructure and energy, driven by large companies, not by small private investors as in the case of “first wave” of Chinese investments until 2010), no one was implemented. That was mainly due to the lack of uninterrupted political support for Chinese investments in infrastructure and energy. At present, China is the 18th investor in Romania (4250 active companies with Chinese capital), the total investments amounting to USD 800 million. The five main Chinese investors in Romania in 2015 were Huawei (with a center of global services since 2012 and an investment plan of EUR 100 million until 2018), China Tobacco International Europe Company (since 2007, with an investment estimated at EUR 40 million), Yuncheng Plate Making, Eurosport DHS and ZTE Romania.

In 2015, China Energy Company Limited (CEFC) started discussions with the KMG International group (former Rompetrol Group) to take over the Petromidia refinery and 500 fuel stations from the Kazakh state company KazMunayGas. According to the agreement of April 2016, the Chinese company will pay USD 680 million and will invest at least USD 3 billion during the next five years. CEFC will become the second largest player on Romanian fuel market, after Petrom. The transaction might be completed by October, 2016. The agreement was part of a broader package of deals worth a total of USD 4 billion signed by the political leaders of China and Kazakhstan in sectors including oil and gas, telecommunications and nuclear power. According to international media, part of the funding would come from China’s USD 40 billion “Silk Road” infrastructure fund. The Sino-Kazakh agreements correspond both to the goals of the Belt-Road initiative and the Kazakhstan’s New Economic Policy – The Path to the Future (Nurly Zhol).

This is one of the relevant examples of the cooperation alongside the Silk Road. This underlines also that in order to enter the Romanian market, China has to resort to third parties, issue that should be addressed.

Taking into account Romania’s current economic performance and its fundamentals, as well as the stringent need to upgrade and develop the infrastructure, we consider that there is a tremendous potential to strengthen the bilateral relationship. More successful cooperation projects, a favourable attitude towards Chinese investments at higher level will improve the perception of China and also the Sino-Romanian relations.

Q:How would you comment on the achievements of the 16+1 so far? Are there any specific examples?

A:The 16+1 framework, complementary with China’s Belt-Road initiative, represents above all an ambitious vision for inter-regional cooperation at a scale never seen before. The 21st century Silk Road, reflecting both the state of the art technologies (including here high-speed railways) and the art of the state in challenging times incorporates China’s initiatives regarding the 16 Central and Eastern European countries (CEEC).

The China-CEEC summits, business forums, ministerial meetings and cooperation guidelines represent useful preparatory tools meant to spur bilateral trade and investment ties. There are many achievements at the institutional level, including the establishment of the Secretariat of China-CEEC Mechanism for Investment Promotion Agencies in Poland, Joint Chamber of Commerce in Poland and China, Association of Tourism Promotion Institutions and Travel Agencies in Hungary, Association for the Promotion of Agricultural Cooperation in Bulgaria and so on. Besides, the China-CEEC think tank network was launched in Beijing on the 16th of December 2015. At the event was invited Victor Ponta, the former Prime Minister of Romania and active supporter of the Sino-Romanian cooperation.

In November 2015 it was adopted “the long-term cooperation plan between China and Central and Eastern Europe” for 2015-2020. The first China-CEECs Transport Ministers' meeting and the Business conference were held on May 16 – 17, 2016 in Riga, Latvia. The “Riga Guidelines on Closer Cooperation in Logistics” (“Riga Guidelines”) adopted are considered a tool to spur the development of the transport corridor between Europe and Asia.

There are also many examples of pragmatic cooperation.

As mentioned by Euractiv, the “cash-strapped Balkans” (Albania, Bosnia and Herzegovina, Macedonia, Montenegro and Serbia) managed to agree with China projects worth several billion EUR. We mention here Mihajlo Pupin bridge in Belgrade (officially opened in December 2014), Stanari lignite thermal power plant in Bosnia (2016), Bar-Boljare motorway in Montenegro (expected to be opened to traffic in 2019, as a part of the Bar-Belgrade-Budapest stretch of the EU tenth transport corridor) and Budapest-Belgrade railway (expected to be finished by 2018). The Chinese Exim Bank provided loans for the mentioned projects.

As stated by Poland's Foreign Minister Witold Waszczykowski at the end of his visit in China (April 2016), “Chinese companies can implement large infrastructure projects in Poland and the region of the Adriatic, the Baltic and Black Sea”. In his opinion, “the opportunities for cooperation with China are endless”, including here cooperation with Chinese contractors in the construction of roads, railways and airports in Poland. The same assertion is valid in the case of all the others CEECs, including Romania.

Q:What do you think of China’s Belt-Road initiative? Are people in CEECs enthusiastic about it?

A:This is the most ambitious, vibrant and large scale initiative of the 21st century. Under this framework, several alliances are relevant. One of them is the 16+1 strategic framework. Another one is the alliance with the Western European countries. Another significant alliance under the current circumstances is the strategic partnership with Russia. That is why the success of the Belt-Road initiative resides not only in the economic, social and cultural elements, but especially in the art of the Chinese diplomacy, fortunately dominated by Confucian values.

Regarding the Sino-Russian relationship, we would like to underline the following. First, China and Russia face common risks and these are a major link between the two neighbours. Second, both China and Russia are willing to influence the New International Economic Order, through the reform of Bretton Woods Institutions. The BRICS Bank and the Asian Infrastructure Investment Bank are two instruments in this regard. Third, at the BRICS summit of July 2015, in Ufa, the Russian President Vladimir Putin invited the participants of the Shanghai Cooperation Organization (SCO) to attend the high level meeting. In this way, countries of Central Asia (where China’s economic influence is increasing) and also the countries of the Eurasian Economic Union were present. Russia transmitted a strong message to China: the Belt-Road initiative is not seen as a threat, but as a bridge of cooperation. In this concert, it is not important which of the two partners is the first and which the second violin in Eurasia as long as they remain strategic partners in the true sense of the word.

Concerning the CEECs, there are no complex surveys in these countries regarding people’s attitude towards this initiative. People in CEECs cannot be enthusiastic as long as they are not aware of the benefits of the cooperation with China. Political will is necessary but not sufficient. And in the countries where the political will is absent, diplomacy and soft power remain the only tools for the time being.

Q:What should China and the CEECs do to realize the Belt-Road initiative?

A:The implications of the cooperation with China should be presented in mass media by objective experts. Misunderstandings and misconceptions should be addressed. The Confucius institutes present in the CEECs should become an effective tool of Chinese soft power. If people become aware of the richness of the Chinese culture, people to people exchanges might increase and this is, alongside diplomacy, formal alliances, trade and investment, one the main channels of the Silk Road.